For all airlines and service providers, it is absolutely essential that quality parts be delivered in time to the maintenance bases, shops and line stations, to improve the maintenance time of the aircraft and its components. To achieve this, organizations track the performance of their suppliers and identify the strategic source of supply for their procurement activities.
“Supplier Rating” business component enables the Procurement Management division of the organization to enhance the relationship with reliable suppliers by comparing and measuring each supplier’s performance among the comparable suppliers. The process of supplier rating is carried out in regular intervals in the organization.
This business component enables the organization to rate all the suppliers for a part or service or both, and also compute the overall rating of a supplier for all parts and/or services. The rating is based on the factors such as Price, Delivery, Quality and Service Quality. You are also provided with the option of creating user-defined parameters such as proximity of supplier location, response time, financial stability, support, quality standards certification and technology, as rating factors.
Supplier rating can be computed based on Part Rating, Service Rating and Overall Supplier Rating.
This method allows the organization to select the most suitable supplier, based on past performance, on whom the purchase order may be placed. Part Rating involves rating a supplier based on the performance pertaining to the supply of a particular part, and not on all the parts supplied Part rating methodology is based on the rating parameters such as Quality Rating, Delivery Rating and Price Rating.
Service rating is computed to identify the suppliers who have performed relatively well on supplying a particular service, even though their overall rating may be just satisfactory. Service rating comprises three parameters - Service Quality Rating, Delivery Rating and Price Rating.
With ‘Service Quality Rating’, the user can rate the supplier based on the quality of the service provided.
Overall supplier rating is computed to compare the rating of a supplier against the rating of all other suppliers. The overall supplier rating determines the rating for all parts or services or even both.
Parameters for computing supplier rating
Suppliers are evaluated based on certain system-defined parameters such as Quality, Delivery, Price and Service Quality.
Quality Rating of an item is calculated based on the quantity of items that are rejected as compared to the total quantity received and the number of problematic schedules. The quality rating for a part is computed only when there is at least one receipt during the rating period.
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Quality Rating |
Quality Index |
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QW - (R1 + R2) * (QW/2) |
1 - (R1+R2) / 2 |
Where,
QW: Quality Weightage
R1 = No of problematic schedules
Total number of schedules
R2 = No of parts rejected_____________
Total number of scheduled quantity
Delivery Rating is computed based on the delivery performance of the supplier.
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Delivery Rating |
Delivery Index |
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Delivery Weightage * Delivery Index of the part |
1 - Delay Index - Early Index - YTR Index |
The delivery rating methodology is based on the following delivery indices:
} Delay Index: For each delayed delivery, the delay index is calculated as:
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Delay Index |
Delay Value |
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Delay Value / (Delivery Days * Schedule Quantity) |
Delay Value + DQ(i) * DD(i) |
Where,
DQ: Accepted delay quantity for that delivery schedule
DD: Delay days and
‘i’ can range between 1 and the number of delay deliveries.
} Early Index: For each early delivery, the early index is calculated as:
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Early Index |
Early Value |
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Early Value / (Delivery Days * Schedule Quantity) |
Early Value + EQ(i) * ED(i) |
Where,
EQ: Accepted early quantity for that delivery schedule
ED: Early days and
‘i’ can range between 1 and the number of delay deliveries.
} Yet to be received index: On the day of supplier rating, for all the quantity that is still pending to be received from the supplier, the supplier will be penalized.
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YTR Index |
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{Pending Qty * (Delay days as on Rating Date + 1)} / (Delivery days * Schedule Qty) |
The price rating is computed to compare the prices for a part offered by a supplier with the minimum of the prices offered by other suppliers or the market price.
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Price Rating |
Price Index |
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Cost Weightage “*” Price Index of the part |
Minimum of the weighted average price of the part across suppliers (or) Standard purchase price for the part __________________________________________________ Weighted average price for the part for this supplier |
Computation of Weighted Average Price for a part for the same supplier
For example, from the same supplier, for the same part condition, if the purchase order quantities are 10 numbers and 20 numbers, with the prices as Rs.2.00 and Rs 5.00 each, the weighted average price is calculated as:
(10 Nos. * Rs.2.00) + (20 Nos. * Rs.5.00) = Rs.4.00
10 Nos. + 20 Nos.
Getting familiar with the activities
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Go to activity… |
For… |
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Compute Supplier Rating |
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Maintain User Defined Parameters |
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Maintain Parameter Indices |
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Maintain Weightages |
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View Supplier Rating |
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Set Options |